By Matthew Elliott
The South Dakota Ag Land Income Tracker is designed to estimate and display changes to the annual revenue per acre derived from standard agricultural practices on an average, unimproved cropland acre in South Dakota counties. The primary aim is to facilitate the determination of cropland value through an income approach to appraisal. This approach involves multiplying the average revenue per acre by a factor, such as the landlord's share or return to capital, which represents income allocated for land and debt service. The resulting value, often referred to as net income per acre, can be divided by the capitalization rate, such as the current long-term interest rate for agricultural real estate, to determine the asset's income-based value. It is important to note that the income estimate provided here does not include income from federal agricultural support programs, non-agricultural income from sources such as leases for wind, solar, or hunting, the net present value from speculation on inflation or technological improvements, or income from alternative practices, improvements, or uses.
Asset Value =
(Average Revenue per Acre × Percent of Landlord's Share)
÷ Capitalization Rate